Prudent Bear Economic Thoughts

[SD Realtor]

Coop I did think it was a well written article. I could not detect any bias either way.

[Carl Veritas]

Signaled by rising prices, the housing industry ramped up production to meet consumers demand, funded by rising home equity values and fueled by cheap bank credit—instigated by the Federal Reserve.

It didn’t matter that the demand was not derived from consumers rising incomes, the industry followed the signal just the same. Once the same Federal Reserve tightens the money spigot, all the activities that sprung on the back of the boom is halted. This is what we are experiencing now.

Price aligns production with consumption in the free market. So that a rising price attracts capital to meet the demand. Manipulating the price of money (interest rates) instead of letting the supply of loanable funds dictate the price distorts the production process—via the business loan market.
The illusion of prosperity lasts as long as the money spigot is open. The worlds central bankers are again poised to mess with the price signal, they call it liquifying the system.

[Carl Veritas]

Signaled by rising prices, the housing industry ramped up production to meet consumers demand, funded by rising home equity values and fueled by cheap bank credit—instigated by the Federal Reserve.

It didn’t matter that the demand was not derived from consumers rising incomes, the industry followed the signal just the same. Once the same Federal Reserve tightens the money spigot, all the activities that sprung on the back of the boom is halted. This is what we are experiencing now.

Price aligns production with consumption in the free market. So that a rising price attracts capital to meet the demand. Manipulating the price of money (interest rates) instead of letting the supply of loanable funds dictate the price distorts the production process—via the business loan market.
The illusion of prosperity lasts as long as the money spigot is open. The worlds central bankers are again poised to mess with the price signal, they call it liquifying the system.

[Carl Veritas]

Signaled by rising prices, the housing industry ramped up production to meet consumers demand, funded by rising home equity values and fueled by cheap bank credit—instigated by the Federal Reserve.

It didn’t matter that the demand was not derived from consumers rising incomes, the industry followed the signal just the same. Once the same Federal Reserve tightens the money spigot, all the activities that sprung on the back of the boom is halted. This is what we are experiencing now.

Price aligns production with consumption in the free market. So that a rising price attracts capital to meet the demand. Manipulating the price of money (interest rates) instead of letting the supply of loanable funds dictate the price distorts the production process—via the business loan market.
The illusion of prosperity lasts as long as the money spigot is open. The worlds central bankers are again poised to mess with the price signal, they call it liquifying the system.

[Carl Veritas]

Signaled by rising prices, the housing industry ramped up production to meet consumers demand, funded by rising home equity values and fueled by cheap bank credit—instigated by the Federal Reserve.

It didn’t matter that the demand was not derived from consumers rising incomes, the industry followed the signal just the same. Once the same Federal Reserve tightens the money spigot, all the activities that sprung on the back of the boom is halted. This is what we are experiencing now.

Price aligns production with consumption in the free market. So that a rising price attracts capital to meet the demand. Manipulating the price of money (interest rates) instead of letting the supply of loanable funds dictate the price distorts the production process—via the business loan market.
The illusion of prosperity lasts as long as the money spigot is open. The worlds central bankers are again poised to mess with the price signal, they call it liquifying the system.

[Carl Veritas]

Signaled by rising prices, the housing industry ramped up production to meet consumers demand, funded by rising home equity values and fueled by cheap bank credit—instigated by the Federal Reserve.

It didn’t matter that the demand was not derived from consumers rising incomes, the industry followed the signal just the same. Once the same Federal Reserve tightens the money spigot, all the activities that sprung on the back of the boom is halted. This is what we are experiencing now.

Price aligns production with consumption in the free market. So that a rising price attracts capital to meet the demand. Manipulating the price of money (interest rates) instead of letting the supply of loanable funds dictate the price distorts the production process—via the business loan market.
The illusion of prosperity lasts as long as the money spigot is open. The worlds central bankers are again poised to mess with the price signal, they call it liquifying the system.

[cr]

[quote=SD Realtor]Coop I did think it was a well written article. I could not detect any bias either way. [/quote]

Agreed. He equally distributed criticism for both McCain and Obama’s “fixes”, neither of which will be good for the US, because neither of them understand the problem.

[cr]

[quote=SD Realtor]Coop I did think it was a well written article. I could not detect any bias either way. [/quote]

Agreed. He equally distributed criticism for both McCain and Obama’s “fixes”, neither of which will be good for the US, because neither of them understand the problem.

[cr]

[quote=SD Realtor]Coop I did think it was a well written article. I could not detect any bias either way. [/quote]

Agreed. He equally distributed criticism for both McCain and Obama’s “fixes”, neither of which will be good for the US, because neither of them understand the problem.

[cr]

[quote=SD Realtor]Coop I did think it was a well written article. I could not detect any bias either way. [/quote]

Agreed. He equally distributed criticism for both McCain and Obama’s “fixes”, neither of which will be good for the US, because neither of them understand the problem.

[cr]

[quote=SD Realtor]Coop I did think it was a well written article. I could not detect any bias either way. [/quote]

Agreed. He equally distributed criticism for both McCain and Obama’s “fixes”, neither of which will be good for the US, because neither of them understand the problem.

[denverite]

The article is fairly comprehensive but misses a major point. The driving factor behind this whole mess is overstimulated consumption, made possible through inexpensive debt. The whole world bought into this paradigm, as promoted by Greenspan.

My point is that, in addition to the financial displacements typically mentioned, it is possible that a fundamental, secular change might be occuring in the form of responsible consumption (buy what we can afford). The entire consumptive model may have shifted. If this happens, then additional economic/financial disruptions are possible beyond what is currently predicted. This behavior is not assured, but I thought the analysis was worth presenting.

[denverite]

The article is fairly comprehensive but misses a major point. The driving factor behind this whole mess is overstimulated consumption, made possible through inexpensive debt. The whole world bought into this paradigm, as promoted by Greenspan.

My point is that, in addition to the financial displacements typically mentioned, it is possible that a fundamental, secular change might be occuring in the form of responsible consumption (buy what we can afford). The entire consumptive model may have shifted. If this happens, then additional economic/financial disruptions are possible beyond what is currently predicted. This behavior is not assured, but I thought the analysis was worth presenting.

[denverite]

The article is fairly comprehensive but misses a major point. The driving factor behind this whole mess is overstimulated consumption, made possible through inexpensive debt. The whole world bought into this paradigm, as promoted by Greenspan.

My point is that, in addition to the financial displacements typically mentioned, it is possible that a fundamental, secular change might be occuring in the form of responsible consumption (buy what we can afford). The entire consumptive model may have shifted. If this happens, then additional economic/financial disruptions are possible beyond what is currently predicted. This behavior is not assured, but I thought the analysis was worth presenting.

[denverite]

The article is fairly comprehensive but misses a major point. The driving factor behind this whole mess is overstimulated consumption, made possible through inexpensive debt. The whole world bought into this paradigm, as promoted by Greenspan.

My point is that, in addition to the financial displacements typically mentioned, it is possible that a fundamental, secular change might be occuring in the form of responsible consumption (buy what we can afford). The entire consumptive model may have shifted. If this happens, then additional economic/financial disruptions are possible beyond what is currently predicted. This behavior is not assured, but I thought the analysis was worth presenting.

[Author]

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